Newer version available

There is a newer version of this publication available:
Debt Advice Handbook Scotland 1st ed - with new material

Lender obligations

• Failure to assess affordability

All firms that provide financial products and services to customers in the UK are regulated and supervised by the FCA.

The FCA sets out a firm’s obligations when providing credit, and all firms must comply with these rules. The rules include taking the interests of customers into consideration and treating them fairly; communicating information clearly to customers; and taking reasonable care to ensure that customers are given suitable advice.

Failure to assess affordability

Another responsibility that lenders have is to assess a customer’s ability to repay the money they have requested to borrow. This is known as an ‘affordability assessment’ and lenders must do this before any credit agreement can be entered into.

This assessment looks at the risk to the lender as well as the client’s ability to repay. The lender will consider whether the repayments would affect the client’s wider financial situation or cause financial distress.

If the lender did not do an affordability assessment, or it was insufficient, raise a complaint with the lender, in the first instance, or the Financial Ombudsman Service (FOS).